Impact of transportation costs and infrastructure quality on Indonesian imports

Abstract

This article investigates the impact of sea and air transportation cost, as well as infrastructure quality, to Indonesia's import. Employing a panel regression model to seek for the answer, the paper find that cost reduction for sea transportation has greater impact on the Indonesia's import volume compared to the air transportation. This paper also finds that Indonesia's infrastructure quality has a significant positive impact on Indonesia's import. The quality of ports, roads, and Linear Connectivity International Shipping (LSCI) are significant factors affecting import volume by sea transportation mode. Meanwhile, import volume by air transportation is significantly affected by the quality of the roads and airports.